The Ground Opens Up

Despite cutbacks across the globe — in the fourth quarter 2008, OAG predicts a 7 percent reduction in capacity worldwide — the likes of Emirates, Etihad and Qatar are forging ahead with expansion plans.
The region had some $140 billion worth of new aircraft orders (around 700 planes) pre-Farnborough (Air Show) and was responsible for most of the $50 billion spent there. The aircraft will fuel a hunger for new destinations that doesn’t look likely to be sated any time soon.

Infrastructure is keeping pace. There are new airports or significant developments at Dubai, Doha (Qatar) and Abu Dhabi as well as at a host of smaller gateways. In all, there will be investment of approximately $50 billion and, by 2012, a total capacity of 320 million passengers per annum at the top 10 airports.

It bodes well for the ground handling companies. Usually state-backed and with a dominant market position, business is booming. True, some states are looking to introduce competition and there is a strong service ethic in the region but even so, many other ground handlers from around the world would be only too happy to swap positions for their low yield, highly-competitive arenas.

For example, Bahrain Airport Services (BAS) has a monopoly at the Kingdom’s international airport, hub of Gulf Air. The company offers everything from traditional ground support to catering and even an engineering school. While a strictly enforced regulatory framework ensures clients aren’t exploited, the robust local economy and strong home carrier translate into reliable traffic growth and a very healthy business.

Stiff competition
In fact, the ground support market is performing well enough for companies without BAS’s advantages to secure both market share at home and a foothold overseas.

Kuwait’s National Aviation Services (NAS), for example, is one of the few in the region with a domestic market largely untapped by an ailing airline and competition on its doorstep.

NAS began life in 2003, a joint venture between the Kuwait-owned PWC Logistics and Bahrain Airport Services. It had a single client in those days (KLM) but has since forged a formidable business despite having to compete against KASCO — the ground handling arm of Kuwait Airways Corporation.

Exactly how stiff that competition is remains a matter of conjecture but NAS achievements should be seen in the regional context of powerful, nationalized monopoly companies. Its progress mirrors that of low-cost airlines such as Kuwait-based Jazeera.

In 2007, NAS catered for more than 1.25 million passengers, around 40 percent of the total at Kuwait International Airport (KIA). Excluding Kuwait Airways’ customers, the figure rises to 62 percent — and that for a company just four years old at the time.

NAS clients are supplied with a host of services, part of a pledge to fulfil just about every need — the proverbial one-stop-shop. The ground work — unloading and servicing aircraft — benefits from the latest equipment, well-trained employees and constant monitoring — but the real added value can be seen in other product features.

The company’s own check-in zones at the airport, utilizing SITA’s CUTE (Common Use Terminal Equipment) system, are a case in point. It streamlines processing and keeps airline costs down — always a welcome move and nigh on imperative in the current aviation environment.

Then there is the Pearl Lounge, an elegantly decorated executive space with all modern conveniences that is available to everyone for a small charge — not just the business and first-class passengers of client airlines.

Another innovative product is Hala Kuwait, which offers arrival, departure and VIP services. The arrivals package goes as far as a presentation bouquet of flowers if required, not to mention the usual escort through immigration and assistance with baggage and the onward journey.

Cargo-wise, NAS is already the leading handler at KIA. New warehousing is expected as part of the KIA Master Plan but NAS has made the best of its existing facilities, offering the usual specialized zones — refrigerated cargo, hazardous materials, animals, et al.

But perhaps most interesting is the NAS “semi-private” terminal, where passengers benefit from an account manager to help negotiate the various formalities and ensure a customized service. The scheme is aimed at top busines executives and VIPs.

Airline approval
NAS terms its service ethos as “going the extra mile” and the company can certainly point to some recent examples of airline approval. It was recently commended by British Airways for achieving 365 days of on-time departures for its Kuwait station.

“We have the tools, the infrastructure and the desire to succeed and these aspects are vital to the development of any rapidly growing business,” says Naji Al-Ajmi, CEO of NAS.

“British Airways is one of the most quality-conscious airlines of the world and they have an excellent track record when it comes to timeliness, quality of service and safety and this milestone further goes to solidify the image of NAS as a world-class ground handler,” he adds.

A renewal of its Emirates contract underlines the point. “Emirates has always been a leader in the airline service industry and for them to renew their ground handling contract for a further period of five years reinstates their trust in our brand,” argues Bara’a Al-Roumi, managing director of NAS.

“Needless to say, we treat all our customers equally and this is the cornerstone of our operational philosophy,” he continues. “No customers are exactly alike in the kind of service they require from us and it is our inherent customized service that separates us from our competitors. Customized solutions are the way to go in this day and age and we provide Emirates with a comprehensive ground handling solution that is tailored to meet its needs on a global platform.”

NAS has also confirmed it will continue in its role as ground handling provider for UNAMI (United Nations Assistance Mission to Iraq) flights. The new agreement is valid for a year and means NAS will handle approximately 25 UNAMI flights per month as well as provide engineering and line maintenance services on an ad-hoc basis.

Overseas expansion
Strength at home is one thing but the real impact comes with expansion, as the ground support market consolidates into global players.

NAS already has a Jordan operation, running the Air Cargo Terminal at Aqaba, Jordan. The real development, however, will be in India. NAS operates at a number of sub-continent airports and obviously has big plans for the country. Indian traffic growth has been well documented, reaching around 27 percent year-on-year.

The market has dipped recently though — there was a contraction in June — and the airline sector will probably go through further consolidation. Air India and Indian Airways have already merged as have Jet Airways and Air Sahara, and Kingfisher and Deccan. Other low-cost carriers SpiceJet, IndiGo, Paramount and GoAir are going it alone so far, but SpiceJet has welcomed an $80 million investment from American billionaire, Wilbur Ross, perhaps indicating the market has further developments in store.

NAS in India
Forecasts suggest India will need investment of around $55 billion in the next decade. Passenger traffic into Indian domestic airports is expected to increase to 45 million by 2010 and Indian airlines will have around 450 – 500 new aircraft.

Although these predictions are not yet taking into account the full depth of the current industry crisis, NAS is determined to play a part in the future of the Indian market and has already concluded several important deals.

One such agreement is with Nova Aviation Services, headquartered in Mumbai. NAS has signed a share purchase agreement, which will give the Kuwaiti concern majority ownership. Nova contracts in India are now NAS-branded — the company will officially be known as NAS India — extending the company’s reach.

In effect, NAS now provides ground support to airlines at Mumbai, Ahmedebad, Nagpur, Indore, Pune and Goa. The deal also encompasses cargo handling at select stations.

“This agreement opens new horizons for NAS and will allow us to expand geographically,” says Al-Roumi. “NAS has plans to further expand into the Indian sub-continent and this is a great stepping stone for us to enhance existing operations in India.

“NAS will be investing a substantial amount of money in upgrading the existing infrastructure at the airports being handled by Nova,” he continues. “We will bring in our expertise for the initial set-up of the operations, which is intended to add value to the entire operation in India as a whole.”

Beyond India, reports suggest NAS is considering moves into Africa, the United Arab Emirates and the Far East as it looks to expand its international footprint.

Given its desire to go the “extra mile,” ground handling companies in those regions and elsewhere would do well to be aware of the young upstart from one of the less well-known Arab States.